Types of debt
Some debts can cost you your home, your energy supply or part of your wages. Others are less urgent. Knowing which is which helps you decide what to deal with first.
Not all debts are equally urgent. Money advisers in Scotland split debts into priority debts, where the consequences of not paying are most serious, and non-priority debts, such as credit cards, loans and buy now pay later. Dealing with priority debts first protects your home, your energy supply and your income.
What is the difference between priority and non-priority debts?
A debt is a priority when not paying it can lead to something you cannot easily put right. Citizens Advice Scotland lists these as priority debts:
- rent arrears and mortgage or secured loan arrears, because you could lose your home
- council tax arrears, because the council can get a summary warrant without a court hearing and then take money from your wages or bank account
- gas and electricity arrears with your current supplier, because your supply could be cut off
- court fines and unpaid child maintenance
- unpaid income tax, National Insurance or VAT
Phone bills and goods on hire purchase can also be priorities if you really need them, for example a car you need to get to work. Our priority debts section explains each one.
Non-priority debts include credit cards, store cards, catalogue debts, personal loans, payday loans, buy now pay later and money you owe to friends or family. Not paying them will not cost you your home directly, but it still has consequences.
Can a non-priority creditor take action against you?
Yes. A lender can add charges, record missed payments on your credit file, pass the debt to a collector and take you to court. In Scotland, a court that agrees you owe the money grants a decree (a court order to pay). After that, sheriff officers (the court officers who enforce debts in Scotland) can use diligence, such as arresting your wages or bank account. Our guide to debt enforcement in Scotland explains each step.
Scotland is different. There are no county court judgments (CCJs) and no bailiffs here. Creditors get a decree, and only sheriff officers can enforce it.
What does this section cover?
These guides deal with everyday debts: what happens if you cannot pay, what the lender must do under the Financial Conduct Authority’s (FCA) rules, and what can follow in Scotland if nothing changes. Lenders must treat you with forbearance and due consideration if you are in, or close to, arrears. That can mean reduced payments or a pause on interest and charges, depending on your circumstances.
Where should you start?
- List everything you owe, and mark which debts are priorities.
- Work out what comes in and goes out each month.
- Contact your creditors before arrears build up. Do not ignore letters.
- Get free, impartial advice, especially if you have several debts or have received court papers.
Free services such as MoneyHelper, Citizens Advice Scotland and StepChange can look at all your debts and every option. See free debt advice in Scotland for phone numbers. If a firm contacts you offering to deal with your debts, check the company is legitimate first.
Official sources
Guides in Types of debt
Common questions
Which debts should I pay first?
Deal with priority debts first. These are the ones where not paying can lead to the most serious consequences, such as losing your home, having your energy cut off or money being taken from your wages. Rent, mortgage, council tax, energy bills with your current supplier and court fines are common examples. Once those are under control, look at credit cards, loans and other non-priority debts.
Can I just ignore a non-priority debt?
No. Non-priority does not mean unimportant. The lender can add charges, record missed payments on your credit file and, in the end, take you to court. In Scotland, once a creditor has a court decree, sheriff officers can arrest your wages or bank account. Contact the lender, offer what you can realistically afford and get free advice if you are struggling.
Will a free debt adviser tell my creditors about me?
Only with your agreement. A free adviser works for you, not your creditors. They go through your debts, income and spending with you and explain your options. If you want them to, they can contact creditors on your behalf or help you write to them yourself.